What the 'Taxing the Rich' Rhetoric Really Means

When I was in college, I took a course in clinical psychology.  One day, the professor shared an experience he had with a paranoid schizophrenic patient.  In one of his first months working at a mental hospital (as they were then called), he met with the patient in his office.  The patient said, "Well, I don't feel comfortable talking to you because there is a hidden microphone in this office."  "Where is it?" my professor asked.  The patient responded: "It's hidden in the doorknob."  The professor then took apart the door knob, laid all the parts out on his desk, and said to the paranoid patient, "See, there's no microphone hidden here."  The patient looked at the parts, looked up at the ceiling, and insisted, "It's up in the light bulb!"

The point of this story is that there's nothing you can do to allay the paranoid thoughts of a paranoid schizophrenic.  Those analysts who address the "tax the rich" and "the rich must pay their fair share" rhetoric are facing the same issue: those who use this rhetoric will never acknowledge the tax rates paid by the rich, accept the facts, and respond with the words, "oh, I didn't realize that the top 15 percent pay seventy percent of the income taxes.  Never mind!"

They will persist with their rhetoric forever.  The reason is that the rhetoric is driven not by the numbers of who pays how much in taxes, but by a desire to build a public relations foundation, an image.  Those who don't respond to real facts don't care what the real facts are.  The "tax the rich" slogan was not begun after a careful analysis of IRS data in the first place.

Here are some of the clues: those who say "tax the rich" almost never say "tax only the rich."  Or "let's increase taxes on the rich and lower the taxes on everyone else."  The real goal of this strategy is to raise everybody's taxes.  The United States already has the highest corporate tax rate in the Western world.  If the president and his supporters really believe that corporations are greedy and will do anything to avoid paying taxes, then they would expect corporations to respond to higher tax rates by leaving the U.S. and opening up businesses in other countries.  And in fact, that's what has already occurred; it's one of the reasons why the U.S. has lost jobs.  If President Obama were really convinced that corporations are greedy, he would use their greed against them and lower their tax rate, bringing them here to open up plants and employ more Americans.  That the Obama supporters' rhetoric is not consistent with their caricature of corporations as driven by greed is not hypocritical; indeed, it's very revealing.

The real function of the "tax the rich" mantra, then, is not to tax the rich and create jobs, but to break the resistance working voters have against tax increases.  By enabling the federal government to appear to "tax the rich," voters are fooled into thinking that Democrats will tax only the rich, whereas in reality they are raising taxes on everyone, particularly those who accept the "tax the rich" rhetoric.  Democrats have escaped criticism for this strategy for several reasons.  One is that most in the news media have fallen for the rhetoric.  They know very little about economics, and they probably don't do their own income taxes.  They studied "communication" and speech in college, not to mention makeup and hair.  They don't have the background or knowledge to understand the big financial or economic issues.  Another reason is that they don't think through the consequences of the progressive tax policy.

Additionally, the largest cities in the U.S., and therefore the largest news markets, are controlled by Democrats.  Anyone hoping to work for a newspaper or TV news station in these cities cannot attack Democrats in a substantive way.  They will be labeled as conservative and extremist.  Consequently, these local news outlets attack corruption only on the edges, seeking out someone whose brother-in-law received a small contract with a city department, for example.  The big macro-level corruption issues and enabling rhetoric are carefully avoided.

The real reason why city governments need so much tax revenue is because their exorbitant pensions and benefit programs have skyrocketed, as many baby boom-age government employees have retired, and the retired are living longer.  There is not enough money in the bank accounts or investments of the "rich" to pay for it all.  And the progressives know it.  They must collect from every citizen, regardless of whether they are rich or not.  And to keep this ruse functioning, they must constantly convince voters that they are on the side of the "working people" and against the rich -- that they are wearing Robin Hood's feathered cap, taxing the rich to give to the poor.  In reality they are taxing the rich and the poor, and keeping the money themselves.  Public-sector unions give campaign contributions to get pensions the average "corporate" worker has never received.

The remarkable thing is not that progressives continue this rhetoric, but that the electorate continues to buy it.  That's why progressives continue it, after all.

If the tax rate placed upon the wealthiest 1% of income earners were increased, the wealthy would act to shelter their incomes and send the money offshore.  Again, though, trying to clarify this point to a progressive is akin to trying to explain things to the paranoid.